Outlook: unacceptable lack of wage growth & unemployment above 5%
“The Reserve Bank’s forecasts show an economy that offers little hope of fair wage increases and falls in unemployment to pre-GFC levels under current policies,” says CTU Economist, Bill Rosenberg. “It says wage growth is ‘subdued’ and held down by continuing unemployment and strong immigration.”
“The Reserve Bank is forecasting that wage growth will be even lower than Treasury’s pre-election forecast, meaning real wages increases will be under 1% a year despite a growing economy. We can and should be doing better than this. New Zealand can do it with policies that support productive investment, such as in manufacturing, bring the exchange rate down to more realistic levels, and ensure wages rise with the productivity of the economy,” Rosenberg said.
“While Treasury forecast unemployment would fall to 4.5% by 2018, the Reserve Bank forecasts it won’t get lower than 5% and will rise to 5.2% between 2015 and 2017. Unemployment was 3.5% in 2007,” he says.
“Meanwhile, banks are funding their lending cheaply from overseas, pushing the dollar up and making the lives of exporters harder, while ensuring depositors don’t see a rise in their returns,” Rosenberg said.
“None of this helps to rebalance the economy and ensure wage and salary earners get a fair share of the growth in the economy that depends on their work. Only better economic, monetary and wage policies can change that,” Rosenberg said.